3 Reasons the Gold Bubble Will Burst
NEW YORK ( TheStreet) -- There are three recent developments with the potential to burst the gold bubble:
Development #1: Instead of European debt woes escalating, they have retreated. Investors are now confident that the
Development #2: China is raising its reserve requirement ratio for banks by 0.5% in an effort to combat inflationary pressures. This is the third tightening enacted by China since September. This policy is viewed as a moderate measure to control inflation without killing growth. These actions are enough to qualify as a negative for gold when considering the asset as a speculative play on inflation.
Development #3: Ben Bernanke set the record straight in his speech to a conference at the European Central Bank in Frankfurt when he lashed back at critics of QE2 by making it clear the United States is nowhere near an inflationary environment. In fact, the contrary risk of deflation still outweighs it. He mentioned that sluggish U.S. growth, falling inflation and an unemployment rate that has hovered near 10% for months convinced
Fed policymakers they needed to
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